There are advantages of the shareholder's agreement: they provide a contractual remedy if their terms are broken,[1] and they can help the corporate entity to maintain the absence of publicity and maintain confidentiality.
Nonetheless, there are also some disadvantages that should be considered, such as the limited effect to the third parties (especially assignees and share purchasers) and that alteration of the terms of an agreement can be time consuming.
There are a number of reasons why the shareholders may wish to supplement (or supersede) the constitutional documents of the company in this way: There are also certain risks which can be associated with putting a shareholders' agreement in place in some countries.
This flexibility, however, can give rise to conflicts between a shareholders' agreement and the constitutional documents of a company.
Although laws differ across countries, in general most conflicts are resolved as follows: